Poor Economics
A Radical Rethinking of the Way to Fight Global Poverty
Abhijit V. Banerjee and Esther Duflo · 2011 · Everything else
14 min · 12 chaptersNarrated in your voice
What it's about
Banerjee and Duflo argue that the long-running fight between pro-aid and anti-aid economists misses the point: poverty is not one problem but thousands of specific, local market failures in food, health, education, credit, and risk. Using randomized controlled trials borrowed from medicine, they test what actually changes behavior among the poor, showing that small frictions of price, trust, and psychology often matter more than ideology or income alone. The book helped found a new, evidence-based development economics.
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Who it's for
- Development workers who want evidence over ideology before designing a program - Economics students curious how randomized trials reshaped an entire field - Anyone donating to global poverty causes who wants to know what actually works
What’s inside
- 1Two Camps and a Third Way1 min
The grand ideological fight over whether aid helps or hurts the poor is largely a distraction, because poverty is not one problem but thousands of separate, testable market failures.
- 2The S-Curve of Appetite1 min
Extra income for poor households does not mainly buy more calories, which undermines the popular idea that poverty is fundamentally a nutrition trap.
- 3Cheap Cures, Empty Clinics1 min
The poor forgo extremely cheap, high-return health measures not chiefly from ignorance but because small costs of price, distance, and inconvenience loom disproportionately large against uncertain future benefits.
- 4Teaching to the Empty Middle1 min
Expanding school enrollment failed to raise learning because curricula are pitched to an elite few, so the fix is teaching each child at their actual level rather than building more schools.
- 5Children as Insurance1 min
Poor families often have many children as a rational hedge against risk and old age rather than from ignorance of contraception, so expanding family planning access alone rarely reduces fertility much.
- 6Living Without a Net1 min
Informal risk-sharing networks among the poor are sophisticated but insufficient, and formal insurance fails to take hold even when it is a good deal, because trust, complexity, and liquidity constraints block adoption.
- 7Why the Moneylender Still Wins1 min
Microfinance genuinely lowers the cost of borrowing but cannot replace the large, flexible loans needed for transformative investment, so its real achievement is smoothing consumption rather than ending poverty.
- 8The Trouble With Waiting1 min
The poor save at low rates not chiefly because they have nothing to spare but because saving requires resisting temptation and social claims with almost no tools to do so, making small commitment devices more effective than income gains alone.
- 9Reluctant Entrepreneurs1 min
Most businesses run by the poor are disguised unemployment rather than budding enterprises, kept permanently small by a return-to-capital curve that only a lucky few ever cross with a large enough infusion.
About Abhijit V. Banerjee and Esther Duflo
Abhijit V. Banerjee and Esther Duflo are economists at MIT and co-founders of the Abdul Latif Jameel Poverty Action Lab (J-PAL), which popularized randomized controlled trials in development economics. In 2019 they shared the Nobel Memorial Prize in Economic Sciences with Michael Kremer for their experimental approach to alleviating global poverty.
